Solidarity economy: finding a new way out of poverty

Camila Nobrega in Rio, in the Guardian

In Brazil, 1.8 million people are employed under this alternative economic model. But is it a viable way to reduce inequality and revolutionise labour relations?

Solidarity economy is based on self-managed, small production groups with no employers and employees. Photograph: Planet finance / Rede Asta

Brazil is experiencing great changes and is being hailed as an international model of social and economic development, mainly because of its significant progress in poverty reduction (pdf).

Locally, though, the country continues to fight against social equalities and faces the challenge to make economic growth more socially inclusive. But through solidarity economy model, an attempt to combine social change with environmental awareness, it is exploring new ways of reducing inequality.

The model is not well known but awareness is growing among researchers and some UN agencies, and Brazil is emerging as a leader of this new movement. The country now has 20,000 enterprises operating within this model, according to a government survey. It shows that 1.8 million people work in the solidarity economy system.

Paul Singer, at the national secretariat of ministry of labour, that carried out the survey, said: "The solidarity economy has emerged as a way out of poverty and continues to do this." He said the survey shows the number of people employed in the system is growing.

Solidarity economy boomed in the 1990s, when Latin America was facing an economic crisis and high unemployment rates. People looking for alternative income sources began to cluster into groups, co-operatives and associations. The model helped decrease poverty in Brazil (pdf). Poverty rate fell by 57% between 2001 and 2011, according to the Brazilian Institute of Applied Economic Research (Ipea), while small businesses accounted for 39% of the income of Brazilians.

Solidarity economy is based on self-management with more egalitarian working relationships, a way of creating job opportunities for poor people. There are small production groups with no employers and employees. Everyone works together, the decisions are taken jointly and members share the profits equally. This model of production also shrinks environmental footprint, promotes responsible consumption, taking into account the whole supply chain under fair trade basis. And it is financed by microcredit and small loans.

A good example of the solidarity economy at work can be seen among a group of women from Duque de Caxias, an impoverished municipality of Rio de Janeiro. As a researcher, I've followed their work for the past two years. The women of Oficina do Pão (which translates literally as "bread factory") have been working together since 2001. They started with making bread and now offer buffet services for events. The group consumes locally and invests in organic products from small producers, as part of promoting local development.

But the gains from the solidarity economy are not easily acheived. Most Oficina do Pão members – housewives or maids – faced gender inequality or violence (23% of Brazilian women are likely to suffer abuse), and it was often difficult to leave their homes. Instable monthly incomes were also a challenge and this made many women leave the work. In 2001, there were 20 women, now there are only five.

But for them, their hard work has paid off. They have been able to increase their family income and undergone empowerment, which has improved relationship with their husbands. The women now also travel to other cities and participate in political discussions with their municipalities. Solidarity economy results are thus not just economic, but social.

Ultimately, it's not just about job. It's a different way of thinking about the economic model, which includes environmental concerns and emancipation of both women and men.

But the future of solidarity economy is uncertain. Expanding the model remains difficult: there are no government incentives for the creation of local groups and access to credit is limited. Consumer awareness is also low.

Still, there is evidence that the model is working and steadily gaining fans across the country. It is one of the engines of the economic and social change in Brazil.

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